Commercial Vessel Arrest A Ship Custodian’s Perspective

1. Commercial Vessel ArrestA Ship Custodian’s Perspective

2. Company Profile National Maritime Services • Substitute custodian for domestic ships & yacht arrests • International custody management for mortgagee banks • Sale of commercial vessels • Storage of federally-seized vessels & aircraft National Liquidators (affiliate) • Domestic recovery of pleasure yachts & aircraft • Sale of recovered collateral

3. Long-term Business Relationships National Maritime Services maintains relationships with a diverse referral base • Mortgagee banks • Admiralty attorneys • Necessaries providers • Government agencies

4. Initial Reason for Arrest/Attachment Commercial Ships Yachts

5. Mortgage Enforcement Options • Preliminary evaluation • Assess various scenarios • Determine best course of action • Judicial foreclosure • Self-help & relocation to preferential jurisdiction • Contractual remedies • Execute stock power/convey ownership • Right of offset • Asset disposition – sell or operate

6. Custody Assignments • Ensure safety of vessel & crew • Control costs • Preserve/enhance vessel value • Prevent additional liens Evaluation • Determine required resources • Estimate ship value • Consider nature of claim • Assess creditworthiness of parties Goals

7. Voluntary Surrender/Abandonment • Immediately take custody of asset • Existing ship manager is likely conflicted • Negotiate lien releases with priority claimants • Determine long-term plan – sell or operate • Vessel Sale • Wind down existing operation • Vessel relocation & layup • Judicial sale to cleanse title • Create sales plan • Continue Operating Vessel • Keep asset off lender’s balance sheet • Utilize SPVs (on shelf, if needed) • Avoid equitable subordination claims • Hire competent manager for long term

8. A Variety of Custody Services • Discreet vessel tracking • On-board licensed watchman • Crew assessment • Insurance • Provisions, bunkers, dockage & shifting • Cargo & passenger discharge • Interaction with local authorities • Maintain classifications/certifications • Vessel sales Custody Costs Money Spent Time

9. Crew Evaluation • Utilize existing crew when feasible • Assess loyalty of master & crew • Determine immigration status • Identify existing medical issues • Compile employment contract information • Identify unnecessary crew/repatriate

10. Insurance Issues Owner’s existing coverage • Payment status of premiums/calls • Affect of arrest/seizure • Naming additional insured(s) • Replacement coverage • Custodian’s liability • Hull & machinery, P&I, pollution • Relocation/final transit and port risk • Fixed premium/Limited term

11. Representative Ship Sales M/V Yosemite • 28,019 dwt bulk carrier • Eastwind bankruptcy asset • Canadian auction & location • Utilized crew to make ship “sale ready” • Oversaw court sale & staffed auction • $6 million+ sales price Accumarine Assets • 5 Inland push boats • 8 Double skin tank barges • 2 locations (AL & TX) • Sold at auction & post-sale • 6 different buyers • $7 million+ cumulative price M/T Blue Jasper • 105,905 dwt Aframax tanker • NMS court-appointed custodian • Collaborated with another S&P broker • Validated commercial reasonableness • $42.5 million sales price

12. Custody Case Examples

13. M/V Blue Emerald • 51,332 dwt product tanker, 2009 build, Singapore registry • Ship mortgage foreclosure - Korea Line (Singapore) • Houston, Texas, USA location • 80 day custody period • Reduced crew to minimum safe manning • Arranged short-term port risk insurance and P&I coverage • Negotiated less-expensive berth • Resolved complicated crew pay issues - diverse group of claimants • Managed crew injury claim – maintenance & cure • Assisted in vessel transfer to subsequent owner

14. Ikaria Maritime Attachment • Claim resulted from CCNI Antartico accident in Ecuador • Simultaneous bunkers & container attachments in 4 US ports • Determined port arrival details of each ship • Confirmed recent bunker purchases • Developed plan to offload and store bunkers • Claimant received alternate collateral quickly

15. Hannah Marine Fleet • Fleet of 12 tugs & 9 barges • Retained by mortgagee bank • Cooperative owner surrendered vessels • Collateral located in 4 different jurisdictions • Provided security, dockage, maintenance, port risk & COFR • Substantial interaction with US Coast Guard • Other liens necessitated subsequent arrest and judicial sale

16. F/V Lady Elizabeth • 35 meter commercial fishing vessel, 2000 build, US flag • Retained by mortgagee bank • Self-help recovery, located in Costa Rica • Negotiated release from other Costa Rican claimants • Relocated to favorable jurisdiction for arrest & judicial sale

17. M/T Fase • 16,750 dwt combined oil & chemical tanker, 2004 build, Liberia flag • Ship mortgage foreclosure • Located in Houston, Texas, USA • 121 day custody period • Required bio-diesel cargo offload/hired additional AMO crew • Completed life raft certification to enhance value • Mortgagee acquired at auction (credit bid) & continued trading

18. M/S Regal Empress • 1,475 passenger cruise ship, 900 crew, 1953 build, 1983 refit • Necessaries claim • 57 day custody period • Significant communication to ensure ship officer’s assistance • Offload of 1.000+ passengers & luggage, return transportation • Repatriated 260 crew, provided escorts for immigration purposes • Considerable interaction with INS (immigration officials)

19. M/V Casino Royale Arrest • 178 cabin gaming cruise ship, 1975 build, Bahamas flag • Located in Bahamas/retained by Bahamian Admiralty Marshal • Required significant interaction with Bahamian government • Alternative claims to gaming equipment • Repatriated unnecessary crew • Contingency case • Vessel ultimately sold as scrap

20. Recent Events Affecting Arrest • Move towards traditional Rule B attachments • Shippers filing Chapter 11